New Price Transparency Rule Will Help Transform America’s Health Care System
There is hope for controlling health care costs and improving quality.
The Trump administration finalized a bold reform on health care price transparency this past week. It is a powerful step forward in lowering costs and improving health care quality.
Health insurance companies will now be required to disclose the price they pay for health care services and prescription drugs, as well as report the estimated out-of-pocket expenses a patient will be expected to pay prior to receiving care.
You might ask, “Why was this not done previously?” Well, we are right there with you!
There is a reason: Policymakers have often ignored the power of consumer choice and real market competition. Instead, government officials have tried for decades to repair America’s broken health care delivery system through legislation and public policy. While these have been generally well-intentioned efforts, they have nonetheless fallen woefully short of achieving their objectives.
Meanwhile, doctors have been deeply frustrated – and patients have been hurting – from the impact of skyrocketing health care costs and an uneven quality of care throughout the health care delivery system. Policy failures have taken place within a framework that puts third parties between patients and doctors in ways that often undermine their ability to work together—at a cost of more than $3.6 trillion annually.
This time is different. The Trump administration’s health care price transparency reform will help drive market competition among health insurance companies, health care systems, physicians, and other health care professionals. This will directly benefit patients by helping to drive down prices and improve quality.
But how will this really work to improve the care provided to everyday Americans?
Patients who previously were in the dark about the cost of their health care—even when they invested a considerable amount of their income in expensive health care plans—will now be provided real-time, personalized insights into service prices and out-of-pocket costs. This will allow patients, or health care consumers, to truly shop around for certain needed health care services in a much more informed manner.
Of course, patients were previously allowed to “shop” around. But how could they possibly be expected to do that effectively when the prices were a mystery?
Instead of focusing on the necessary information needed to make appropriate health care decisions—such as price and quality—patients have been forced to rely on what they see in marketing campaigns. The information seen on billboards or the TV often falls far short of the kind of information that is necessary for persons to make decisions that impact their health and that of their families.
With the administration’s reforms, health care plans and providers will need to win over patients by demonstrating their true worth through actionable data for “shoppable” medical services.
Not only will this new transparency program further empower patients today, it will also push the boundaries of health care innovation tomorrow. Innovators will clamor for the chance to be the one that patients turn to when they want to access and compare prices easily and efficiently.
Additionally, health care providers will need to innovate to showcase their added value and “one up” their competitors. If they don’t, the market will react and the some of the worst performers in the marketplace may fizzle out.
This reform also sets the stage for further transparency. While prices are important pieces to the health care transformation puzzle, transparent clinical outcomes are also crucial to fixing our health care system. As policymakers lift the veil on previously “secret” prices, public pressure will mount on high-priced health systems and physicians to demonstrate their value to the everyday patient.
Ultimately, this competition will likely lead to greater transparency in the clinical outcomes that matter most to patients, further driving our health care delivery systems to reward value.
While we all like easy health care fixes, the harsh reality is that there are no simple solutions. The Trump administration’s reform is, however, a helpful step. This reform on price transparency related to insurers joins another effort to bring price transparency to hospitals. In both cases, Americans will be the winners when these reforms help to drive prices down, improve quality, and re-establish the delivery of American health care on the basis of the patient-physician relationship.
